Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has faulted key aspects of a recent publication by KPMG on the country’s newly enacted tax laws.
The Committee argued that much of the firm’s analysis was based on misunderstandings of policy intent, mischaracterisation of deliberate reforms and the presentation of opinions as facts.
Chairman of the Committee, Taiwo Oyedele, in a detailed response titled “Response to KPMG: Observations on Nigeria’s New Tax Laws,” said while some of the issues raised by the consulting firm were useful, particularly those relating to implementation risks and clerical or cross-referencing matters, the bulk of the commentary failed to properly situate the reforms within their broader fiscal and economic objectives.
According to Oyedele, several matters described by KPMG as “errors”, “gaps” or “omissions” were either based on incorrect conclusions, incomplete understanding of the reforms, missed policy context, or reflected preferences for alternative outcomes rather than flaws in the law itself.
He said disagreement with policy direction should not be presented as technical errors, noting that other professional firms adopted a more constructive approach by engaging directly with policymakers for clarification and mutual learning.
Oyedele stressed the new tax laws contain deliberate policy choices designed to meet defined reform objectives, and that it is important to distinguish between such choices and recommendations that merely reflect the preferences of external advisers.
Addressing concerns around the taxation of shares and the stock market, Oyedele dismissed suggestions that the new chargeable gains provisions would trigger a sell-off.
He said the tax rate on gains from shares was not a flat 30 per cent, explaining that it ranged from zero to a maximum of 30 per cent, which is expected to reduce to 25 per cent.
Oyedele added about 99 per cent of investors qualify for unconditional exemption, while others are eligible subject to reinvestment.
“The stock market is currently at an all-time high with increased investment flows, showing that investors understand that the reforms strengthen company fundamentals, profitability and cash flows,” he said, adding that claims of an impending sell-off were not supported by evidence.
On the commencement date of the new laws, Oyedele argued that proposals to align implementation strictly with the start of an accounting period failed to appreciate the complexity of a wholesale tax reform.
He said the changes cut across multiple assessment bases, audit timelines, deductions, credits and penalties, making it impractical to anchor commencement to a single accounting date without leaving critical transition issues unresolved.
He also defended the inclusion of provisions on the indirect transfer of shares, describing them as consistent with global best practice and international efforts to curb base erosion and profit shifting.
According to him, the objective was to close a long-standing loophole exploited by multinational companies and other investors, not to undermine competitiveness.
He described claims that the provision could threaten economic stability as misleading.
On value added tax, Oyedele said calls for an explicit VAT exemption on insurance premiums were unnecessary, noting that insurance premiums do not constitute a taxable supply under Nigerian tax law.
“Insurance is about risk transfer, not the supply of goods or services subject to VAT. This has always been the legal and administrative position,” he said.
Responding to concerns about the inclusion of “community” in the definition of a taxable person, Oyedele said the drafting approach was consistent with modern legislative principles.
He explained that statutory definitions apply wherever the defined term is used, unless the context dictates otherwise, adding that comprehensive definitions help streamline operative provisions and avoid repetition.
He also defended the composition of the Joint Revenue Board, saying its revenue-focused membership was intentional and designed to provide subnational tax perspectives that complement the fiscal policy mandate of the Ministry of Finance. He noted that the structure mirrored that of the former Joint Tax Board, which functioned effectively.
Clarifying dividend taxation, Oyedele said KPMG appeared to conflate foreign-controlled companies with foreign operations of Nigerian companies.
He explained that dividends from foreign companies could not be franked because no Nigerian withholding tax would have been deducted, and that different treatment of dividends from Nigerian and foreign companies reflected a deliberate and logical policy distinction.
On non-resident taxation, he said the assumption that final withholding tax automatically removes the obligation to register or file returns ignored the broader purpose of tax administration.
He noted that filing requirements apply even where tax has been finally deducted, both for residents and non-residents, as returns serve compliance and information purposes beyond revenue collection.
Oyedele also criticised proposals that he said would undermine key reform objectives.
He rejected suggestions to exempt foreign insurance companies from tax on premiums written in Nigeria, warning that such a move would disadvantage local insurers in their own market.
He also defended the disallowance of tax deductions for foreign exchange sourced from the parallel market at rates above the official window, describing it as a fiscal measure aligned with monetary policy to discourage round-tripping and support naira stability.
He further explained that linking deductibility of expenses to VAT compliance was an anti-avoidance measure aimed at eliminating the advantage previously enjoyed by businesses that patronised VAT-evading suppliers.
According to him, the rule promotes fairness and encourages voluntary compliance, especially given provisions that allow for self-charging of VAT.
On personal income tax, Oyedele said criticisms of the 25 per cent top marginal rate ignored the fact that effective tax rates for high earners could be significantly lower due to pension contributions and other reliefs.
He said the rate compared favourably with those in several African countries and advanced economies, arguing that the structure promotes fairness without eroding competitiveness.
He added that the combination of higher rates for top earners and lower corporate tax was intended to ease the tax burden associated with business formalisation.
He also pointed out factual errors in KPMG’s analysis, including references to the Police Trust Fund, which he said expired in June 2025 following the end of its six-year statutory lifespan.
He noted that concerns about the impact of small company tax exemptions on larger firms predated the new laws, as the relevant thresholds were introduced under the Finance Act 2021.
Oyedele said the publication failed to acknowledge major structural improvements introduced by the reforms, such as tax simplification and harmonisation, the planned reduction in corporate tax rate to 25 per cent, expanded input VAT credits, exemptions for low-income earners and small businesses, the removal of minimum tax on turnover and capital, and stronger investment incentives for priority sectors.
He said the reforms were the product of extensive consultations and a transparent legislative process that included public hearings and opportunities for professional input.
While acknowledging that clerical inconsistencies could arise in any comprehensive overhaul, he said such issues were already being addressed internally.
“The success of the new tax laws now depends largely on administrative guidance, clarifications from the tax authority and supporting regulations, pending future amendments,” Oyedele said.
He called on stakeholders to move beyond static critique and adopt a more collaborative approach that supports effective implementation and advances Nigeria’s goal of building a self-sustaining and competitive economy.